Sick leave, PTO and balances

California treats sick leave and vacation very differently, and Paidsley keeps them in separate buckets for that reason.

The short version

Paid sick leave is a statutory minimum. It accrues, it carries over, it does not have to be paid out when someone leaves.

PTO or vacation is whatever you promise — but once promised, it vests as it is earned, it cannot be forfeited, and any unused balance must be paid out when employment ends.

That second point is the one that costs money, so it is worth being precise about.

Why a PTO balance is wages

In Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774 the California Supreme Court held that vacation pay is a form of deferred wages, earned as work is performed. It follows that:

• "Use it or lose it" is unlawful in California. Vacation cannot expire.
• A reasonable cap on further accrual is allowed — you may stop someone accruing more once they reach a ceiling — but you cannot take away what they have already earned.
• On separation, all vested, unused vacation is paid at the final rate of pay, under Labor Code § 227.3.

Paidsley: a leave balance is a running ledger, not a number an administrator can retype. Opening balances, accruals, usage and corrections are all separate entries. A correction is recorded as an adjustment showing the old and new figures, so a balance can be explained rather than merely asserted.

Paid sick leave

California's floor requires accrual of at least one hour for every thirty hours worked, the ability to use at least forty hours or five days per year, and carry-over of unused time subject to a cap. Many California cities require more than the state minimum. If you are unsure whether a local ordinance covers you, choose the most generous option in Settings.

Sick leave has its own pay-rate rules, which is why Paidsley asks you to elect a sick-pay calculation method before it will run payroll rather than guessing.

Setting an opening balance

When you move to Paidsley from another system, people arrive with balances already earned. Set them on the employee's record, or import them in bulk from your payroll provider's PTO report.

An opening balance is recorded as a dated ledger entry, not an edit. Setting it again later posts a correction for the difference rather than overwriting the first figure. That matters because the balance is a wage liability, and a number that can be quietly retyped is a liability that can be quietly erased.

Negative balances

If someone takes time they have not yet accrued, the balance goes negative and Paidsley leaves it visible. It does not round it up to zero.

Advancing PTO is lawful. Recovering it by deducting from someone's final wages is not — Labor Code §§ 221 and 224 prohibit deducting from earned wages to recoup an advance. So a negative balance is a fact to resolve deliberately, either by setting a correct opening balance if it is a data gap, or by accepting it as advanced time.

Unlimited PTO

Paidsley supports unlimited PTO per employee, and asks for the date it started. That date is not bureaucracy.

In McPherson v. EF Intercultural Travel LLC (2020) 47 Cal.App.5th 969 the court held that an "unlimited" policy which is not truly unlimited in practice can still create vested vacation payable under § 227.3. The court looked for a policy that is in writing, says clearly that time is not accrued or vested, spells out the employee's rights, and is administered fairly so people can genuinely take time off. A checkbox in software is not a policy — it records one.

Two consequences Paidsley enforces:

Switching someone to unlimited does not erase what they already earned. Hours vested before that date were earned as wages and remain payable when they leave. Paidsley keeps them visible and reportable rather than letting them vanish the moment the box is ticked.

Unlimited PTO does not touch sick leave. Statutory sick leave minimums apply regardless of any unlimited vacation policy, so sick leave keeps accruing separately.

Partial-day absences for exempt employees

Deducting from an exempt employee's salary for a partial-day absence generally destroys the exemption. Deducting from their vacation bank is different: Conley v. Pacific Gas & Electric Co. (2005) 131 Cal.App.4th 260 permits it, provided the deduction is made in reasonable increments — the case concerned four-hour blocks — and the employee's salary itself is untouched.

Paidsley: partial-day draws against a vested bank are recorded in increments rather than to the minute, and a draw is refused if it would overdraw the bank. Salary is never reduced.